Physician groups demand five-year transition to new Medicare system

Three of the nation's largest physician groups will tell Congress on Thursday that Medicare needs to overhaul over the next five years the way it pays for care.

The groups are scheduled to testify before the House Energy and Commerce Health subpanel about proposals to replace the dreaded Sustainable Growth Rate (SGR) formula, which calls for deep cuts to Medicare payment rates. Republicans and the administration have vowed to repeal the formula this year, but doing so would cost almost $300 billion.

The formula was enacted in 1997 and creates a target growth rate linked to GDP. But Medicare costs have outpaced the target, in part because of technological advances and an aging population, leaving lawmakers scrambling periodically to postpone looming cuts; on Jan. 1, physicians again face a 29.5 percent cut if lawmakers don't act.

"The only way to start on a path to permanently reform the physician payment system is to repeal the SGR," American Medical Association President Cecil Wilson said in written testimony obtained by The Hill.

The AMA, along with the American Academy of Family Physicians and the American College of Surgeons, is asking Congress to repeal the SGR formula this year and put in place a five-year transition period during which different payment models can be tested.

"During this time," Wilson will testify, "policymakers, stakeholders, and experts would work to develop and transition to a new Medicare physician payment system."

Wilson said the AMA is working with specialty and state medical societies to form a new "Innovator Committee" of physicians and experts to test and evaluate some of these experiments.

"Replacing the SGR," he wrote, "should not be another one-size-fits-all formula. Rather, a new system should involve transitioning to a new generation of payment models that reward physicians and hospitals for keeping patients healthy, managing chronic conditions in a way that avoids hospitalizations, and, when acute care episodes occur, delivering high quality care with efficient use of resources. We envision physicians choosing from a menu of payment models, selecting ones that best address their patients' needs, specialty, practice type, capabilities and community."

David Hoyt, the executive director of the American College of Surgeons, will also testify about the need for "a system of separate service category growth rates that recognizes the unique nature of the various types of services that physicians provide to their patients, while allowing for increased payments for areas experiencing workforce shortages such as primary care." The new system would determine reimbursements "based on the spending and volume growth among like services."

And Roland Goertz, president of the American Academy of Family Physicians, is requesting that primary-care physicians get at least a 2 percent higher payment update than others during the transition period. The group also wants Congress to continue a temporary primary-care incentive bonus in the healthcare law and increase it from 10 percent to 20 percent. In addition, it wants to make permanent the law's support for a two-year Medicaid payment bump for primary-care doctors.

"Fee-for-service [Medicare] recognizes medical care as a series of things physicians do," Goertz will testify. "But what the formula cannot do is pay for thought, analysis, deduction, discussion and persuasion and for the value that comes from managing the care of the whole person, as well as the value that comes from avoiding unnecessary care."